VANCOUVER, June 7, 2017 /PRNewswire/ - With oil price projections fluctuating among the experts, the only way oil producers can ensure their survival is to drive down their cost of production. Those that produce the cheapest, will survive the longest.

Meanwhile global supply has resumed strong growth, outpacing the increase in demand despite production cuts made by Opec and 11 non-Opec countries last year.

The Harvard University professor who predicted oil's 2014-16 downturn in 2012, is predicting another "substantial fall" unless oil demand growth rebounds to record levels in 2017.

What that means is that the oil most expensive to produce, will be quickly phased out.

Many of the world's largest oil reserves currently go unproduced, because formation challenges make wells too complicated, and too expensive to produce.

Petroteq Energy Inc. (TSX.V: PQE) (OTCQX: PQEFF) is a small-cap oil and gas exploration and production company with an edge that even most majors can't compete with.

They can still make a profit at $25 per barrel.

Not many companies could still survive if the price of oil dropped to less than half from where it is now. But armed with a new oil tech designed to unlock production from previously "inaccessible" oil reserves, and a sizeable position on a field with over 160 million barrels of oil in place [1], Petroteq could.

Here's how:

#1 Shallow Depths Equal Shallow CostsThe current average cost of drilling a well in the Permian Basin is between $5 million and $9.33 million. But that accounts for long horizontal lengths, which currently amount to a cost of $970,000 per 1,000 ft.

Petroteq is the largest shareholder and a strategic partner of Accord GR Energy, Inc., that controls a 7000-acre lease in Edwards County, Texas, with potentially over 160 MM barrels of oil in the ground. It's targets are in the underdeveloped Wardlaw Field. This is an extra-shallow heavy oil field. The average well depth of the top zone, the A-Zone, is at an extremely shallow depth, between 236 to 260 ft.

Armed with a pair of innovative technologies that were proven to work last February, Petroteq and Accord's strategy does not require lateral drilling. Instead, the company will be drilling a series of conventional vertical wells, that are expected to cost less than most MSRP prices on a new vehicle: approximately $25,000 per hole.

This lower threshold for each hole further drastically reduces the company's dry-hole risk, while affording Petroteq the ability to plan drilling programs of upwards of 40-wells per phase.

The Wardlaw Field, which to-date has had over 134 production wells drilled since discovery, prior to Petroteq's Accord was producing up to 20 bpd, which calculates into gallons per day on the per well basis. In over 70 years since the first oil was produced in the region, a little over than 117,000 bbls have come out of the Wardlaw.

The reasoning, is that though there is a massive amount of oil in place, the field has no water, gas, or other drive mechanism. The formation's pressure is abnormally low. Thus all of the other wells to-date have had a history of producing oil at extremely low production rates.

The result is an oil field with swaths of land available for extremely low prices, waiting for a figurative Prince Charming to awake it from its slumber.

Petroteq and its operational and technological innovation partners Accord and Galex Energy, took on the challenge with their pilot project last year, and proved that they're the ones who will finally get it right.

#2 Riding the WaveThrough Accord, Petroteq has the rights to a proprietary technology called SWEPT, developed by Galex Energy Corp.

SWEPT uses impulse waves to unlock the hydrocarbons the industry finds toughest to recover. It does so by loosening up rock filtration and fluid properties, which allow the fluids to flow more freely.

In development for more than a decade, SWEPT is designed to be universally applicable to oil fields all over the world, and to resolve all types of complications oil producers may face.

SWEPT handles:

Lack of pressure

High viscosity

Poor rock properties

High water content, low oil saturation

And while SWEPT resolves challenges and/or improves less than desirable conditions, it has one major component that makes it even more appealing to other major players in the industry.

It's application is cheap.

SWEPT doesn't require expensive tools to be run down hole. Instead, it is run from the wellhead, which is calibrated specifically for the unique conditions of the target field.

Wave treatments from the SWEPT wellhead cause changes to occur in the oil containing rock, as well as the oil contained in the rocks. These changes impact all physical levels of the system from the smallest molecular and micro-capillary to the macro level.

To remove any doubt, they carried out the tests on the most depleted section of the field.

They chose an area where the "easy" oil had already been extracted, and only the most difficult oil trapped in the rocks' "matrixes" remained.

In essence, they chose to make the impossible possible, and did so with flying colors.

This was an important test. Because this is exactly the type of trapped oil that makes up 90% of the Wardlaw Field's reserves.

SWEPT's main objective is to trigger the field to release its oil with natural energy, and enhance oil recovery by more than 70% to produce at much higher rates.

The technology is low-cost, easy-to-control, and universal. It involves light-weight equipment at the well-head, and can be fine-tuned and adjusted to the specifics of each field's unique characteristics.

It's already shown itself to be incredible effective.

But it's a total powerhouse for production when combined with…

#3 State of TransitionThe S-BRPT Process is the other proprietary technology (developed by partner Galex) will be used to maximize value on the Wardlaw Field. When combined with SWEPT, the S-BRPT will draw interest from majors looking to reduce their per-barrel production cost.

While wells will only cost $25,000 to drill, it will only cost the company $40,000 to per well to complete and tie-in for production.

Adapted from a technology that began its use in the 1930s through to the 1980s, the S-BRPT method was developed to produce oil from vast reserves of extra-heavy oil, at extra-shallow depths.

Unlike other methods that can be both financially and environmentally costly, the S-BRPT process is very low on energy and water consumption, and produces very low greenhouse gas emissions.

The process involves altering the physical state of the hydrocarbons into a vapor/gaseous form underground, only to return it to a liquid state at the surface.

This allows the hydrocarbons to flow more freely to the collection point at the wellhead.

The carefully tailored for Wardlaw combination of both S-BRPT and SWEPT resulted in the new process S-BTF that will provide a 1500% increase in production on the testing, and proved well rates potential at 10 barrels per day or greater.

It was obvious to all involved, that the combination of the two methods greatly improved the feasibility of the entire field. To the Accord/Petroteq team, it became clear…

They're ready to ramp up.

BONUS #4 Back of Napkin EconomicsPetroteq's Accord already has 7,000 acres in the Wardlaw, but given their unique ability to produce from it, the company will have sparse competition when it comes time to acquire more land for wells.

But the key to their business model that separates Petroteq from majority of their oil patch counterparts is how low the price of oil can go before their program stops being economic.

Even in a worst-case scenario, a well produces 10 barrels per day for a year. That's 3,650 barrels of oil.

That well will have cost $65,000 to drill, complete, and tie in.

For the well to break even, oil could be as low as just under $16.50. At even $25 a barrel, the well remains economic and commercially viable.

As we know, oil is currently hovering around $48 per barrel. And even heavy oil is getting near-par pricing to Texas sweet crude, thanks to a downturn in supply coming from Venezuela.

Through Accord, Petroteq has found a way to make a profit at drastically low oil prices. They have the technology to not only improve their chances on each hole they drill, but to lure the interest of majors looking for ways to maximize their own production.

The company has a field wide open and ready to be drilled, with many, many wells, to add up to a very profitable portfolio of extra-shallow, heavy oil wells.

As word gets out of the effectiveness of SWEPT and S-BPRT, the majors will certainly take notice. If the price of oil does drop considerably, there will be plenty of juniors that aren't Petroteq available for majors such as Murphy Oil, ConocoPhillips, or Chevron to possibly snap them up.

Another possibility would be for one of the largest major oilfield service providers such as Baker Hughes, Schlumberger or Halliburton to outright buy out Petroteq and its subsidiary Accord's interest in Galex's technologies, and roll out the methods across North America and beyond.

In the meantime, even with an expected price drop on the horizon, Petroteq has access to the technology and oil in place to ride the wave to profitability.

Forward-Looking Statements This article [news release] contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements can be identified by words such as "anticipates", "intends", "plans", "believes", "seeks", "estimates", "expects", "guidance", "suggests" and similar references to future periods. These statements include, but are not limited to, statements about future plans, expectations and objectives for the operations conducted by Accord GR Energy, Inc., an affiliate of Petroteq, and Galex Energy, the owner of the SWEPT technology and the S-BRPT technology and licensor of the technologies to Accord, and includes oil and gas lease positions, drilling plans, capital plans, estimated drilling, completion and tie-in costs for wells, well testing and production performance, pilot operations and studies, technology applications and performance, oil prices, and well payouts and profitability. While forward-looking statements are based on data, assumptions and analyses that Petroteq believes are reasonable under the circumstances, whether actual results, performance or developments will meet the company's expectations and predictions depend on a number of risks and uncertainties that could cause the actual results, performance and financial condition of Petroteq and Accord, its affiliate, to differ materially from Petroteq's expectations.

As "Risk Factors" that could affect Accord's operations, and the business of Petroteq, the operations conducted by Accord using the SWEPT technology and the S-BRPT technology (collectively, the "Technologies") in the Wardlaw Field in southwest Texas are preliminary and obtained through pilot testing and the drilling and testing of three new wells in the Field. There can be no guarantee as to the number of additional wells that can be or will be drilled by Accord in the Wardlaw Field, that existing or new leases can be obtained by Accord or held by production, or that the initial results obtained by Accord – results that are dependent on the successful application and performance of the Technologies, drilling, completion and tie-in costs, and well production performance – will be achieved with additional wells that may be drilled by Accord in the Field. In addition, there can be no guarantee that Accord will be able to secure oil and gas leases in other fields and prospective areas or that it will be able, either from an operational or financial standpoint, to drill additional wells on any such new leases or that the application of the Technologies to any such wells, associated drilling and completion costs, and production that may be achieved from such wells will yield results that are substantially similar to (or better than) the initial results achieved by Accord in the Wardlaw Field in southwest Texas.

Any forward-looking statements made by the author in this article, to the extent based on information provided by Petroteq, speaks only as of the date on which such statements are made through publication of this article. Factors or events that could cause the actual results or events to differ may emerge from time to time, and it is not possible for Petroteq to predict all of them. Neither the author of this article – nor Petroteq – undertake any obligation to publicly update any forward-looking statement, whether as a result of new information or events, future developments or otherwise, except as may be required by law.

Cautionary Note to InvestorsThe U.S. Securities and Exchange Commission ("SEC") permits oil and gas companies, in their filings with the SEC, to disclose only proved, probable and possible reserves that meet the SEC's definitions for such terms. The author of this article – based on information provided by Petroteq or Accord, its affiliate, may use certain terms in this article such as "reserves", "recoverable reserves", "estimated reserves" and other similar terms that SEC rules and guidelines strictly prohibit Petroteq from using or including in filings with the SEC. Use of such terms – though believed to be reasonable in nature – do not take into account the certainty, timing or cost of resource recovery, which is contingent on exploration, drilling and production success, the successful application of the Technologies and technological improvements, both in drilling and in production, commerciality, and economic feasibility and efficiencies and other factors, and are therefore not indicative of expected future resource recovery and should not be relied upon. Investors are urged to consider carefully any disclosures that may be made from time to time in Petroteq's Annual Report. A fee was paid for the distribution of this report. This is not a solicitation for investment. Investors should always consult an investment advisor before making any trading decisions.

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